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August 07, 2020

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August 06, 2020

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Use of a Common Agent Can Raise Antitrust Concerns

Providers that are not financially or clinically integrated must keep separate operations. This can extend to the use of a common agent for the non-integrated providers. The U.S. Department of Justice and Federal Trade Commission addressed this issue in their Statements of Antitrust Enforcement Policy in Health Care. In that guidance, the agencies give the following example of impermissible activity by a physician hospital organization (“PHO”):

The venture hires an agent to negotiate prices with payers on behalf of the PHO’s participants. The agent does not disclose to the payer the prices the participants are willing to accept . . . but attempts to obtain the best possible prices for all the participants. The resulting contract offer then is relayed to each participant for acceptance or rejection.

The agencies note that the activity mentioned above is prohibited because it “amounts to a per se unlawful price agreement. The participants’ joint negotiation through a common agent confronts the payer with the combined bargaining power of the PHO participants, even though they ultimately have to agree individually to the contract negotiated on their behalf.”

In addition, where physicians make up a large share of the providers in the market and have the power to raise prices above competitive levels by acting collectively, a collective refusal to deal (whether or not a common agent is used) could constitute an illegal boycott in violation of the antitrust laws.

©2020 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume IX, Number 353

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About this Author

John Steren, Epstein Becker Law Firm, Health Care Litigation Attorney
Member

E. John Steren is a Member of the Firm in the Health Care & Life Sciences and Litigation & Business Disputes practices, in the Washington, DC, office of Epstein Becker Green. Mr. Steren devotes a significant portion of his practice to helping health care organizations manage the antitrust risks of joint ventures and other business arrangements. He also focuses his practice on other complex commercial and civil litigation matters.

202-861-1825
Patricia M. Wagner, Epstein becker green, health care, life sciences
Member

PATRICIA M. WAGNER is a Member of the Firm in the Health Care and Life Sciences and Litigation practices, in the firm's Washington, DC, office. In 2014, Ms. Wagner was selected to the Washington DC Super Lawyers list in the area of Health Care.

Ms. Wagner's experience includes the following:

Advising clients on a variety of matters related to federal and state antitrust issues 

Representing clients in antitrust matters in front of the Federal Trade Commission and the United States Department of Justice, and state antitrust authorities 

Advising clients on issues related HIPAA Privacy and security

Advising clients on issues related to state licensure and regulatory requirements

202-861-4182